Head to Head Contrast: Royal Bank of Scotland Group (RBS) and Royal Bank of Canada (RY)

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Royal Bank of Scotland Group (NYSE: RY) and Royal Bank of Canada (NYSE:RY) are both large-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, risk, earnings and dividends.

Volatility & Risk

Royal Bank of Scotland Group has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Royal Bank of Canada has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500.

Valuation and Earnings

This table compares Royal Bank of Scotland Group and Royal Bank of Canada’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Royal Bank of Scotland Group $19.56 billion 1.96 $1.78 billion $0.65 9.86
Royal Bank of Canada $40.37 billion 2.88 $8.74 billion $6.06 13.33

Royal Bank of Canada has higher revenue and earnings than Royal Bank of Scotland Group. Royal Bank of Scotland Group is trading at a lower price-to-earnings ratio than Royal Bank of Canada, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Royal Bank of Scotland Group and Royal Bank of Canada’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Bank of Scotland Group 11.77% 7.04% 0.46%
Royal Bank of Canada 21.48% 18.11% 0.99%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Royal Bank of Scotland Group and Royal Bank of Canada, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Bank of Scotland Group 0 6 7 0 2.54
Royal Bank of Canada 0 5 3 0 2.38

Royal Bank of Canada has a consensus target price of $100.50, indicating a potential upside of 24.50%. Given Royal Bank of Canada’s higher possible upside, analysts clearly believe Royal Bank of Canada is more favorable than Royal Bank of Scotland Group.

Dividends

Royal Bank of Scotland Group pays an annual dividend of $0.10 per share and has a dividend yield of 1.6%. Royal Bank of Canada pays an annual dividend of $2.86 per share and has a dividend yield of 3.5%. Royal Bank of Scotland Group pays out 15.4% of its earnings in the form of a dividend. Royal Bank of Canada pays out 47.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Institutional and Insider Ownership

0.6% of Royal Bank of Scotland Group shares are held by institutional investors. Comparatively, 40.1% of Royal Bank of Canada shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Royal Bank of Canada beats Royal Bank of Scotland Group on 12 of the 15 factors compared between the two stocks.

Royal Bank of Scotland Group Company Profile

Royal Bank of Scotland Group Plc engages in the provision of international banking and financial services. It operates through the following segments: Personal and Business Banking, Commercial and Private Banking, RBS International (RBSI), NatWest Markets, and Central Items and Other. The Personal and Business Banking segment consists of the United Kingdom Personal, Business Banking, and Ulster Bank RoI sub-segments.The Commercial and Private Banking segment covers the Commercial Banking, Private Banking, and RBS International Commercial Banking sub-segments, involved in serving retail, commercial, corporate, and financial institution customers. The RBSI serves retail, commercial, corporate and financial institution customers in Jersey, Guernsey, Isle of Man and Gibraltar and financial institution customers in Luxembourg and London. The NatWest Markets offers corporate and institutional customers global market access, providing them with trading, risk management, and financing solutions. The Central Items and Other segment includes corporate functions, such as RBS treasury, finance, risk management, compliance, legal, communications, and human resources. The company was founded on March 25, 1968 and is headquartered in Edinburgh, the United Kingdom.

Royal Bank of Canada Company Profile

Royal Bank of Canada, together with its subsidiaries, operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers personal and business banking services, as well as auto financing and retail investment products. This segment also provides a suite of financial products and services to individual, business clients, and public institutions through its branch, automated teller machines, online, mobile, and telephone banking networks, as well as through sales professionals. Its Wealth Management segment offers a suite of investment, trust, banking, credit, and other wealth management solutions to high net worth and ultra-high net worth clients; and asset management products and services directly to institutional and individual clients through its distribution channels and third-party distributors. The company's Insurance segment provides life, health, home, auto, travel, wealth, group, and reinsurance products and solutions through retail insurance branches, field sales representatives, advice centers, and online network, as well as through independent insurance advisors and affinity relationships. Its Investor and Treasury Services segment offers asset services, custody, payments, and treasury services for financial and other institutional investors. This segment also provides cash management, correspondent banking, and trade finance for financial institutions; and short-term funding and liquidity management services. The company's Capital Markets segment offers corporate and investment banking, as well as equity and debt origination, distribution, and structuring and trading for public and private companies, institutional investors, governments, and central banks. Royal Bank of Canada was founded in 1864 and is headquartered in Toronto, Canada.

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